The Retail Bubble Stocks are Deflating

These dozen stocks set all-time highs or multi-year highs in 2012 but their share prices are heading for sale bin.

NEW YORK ( TheStreet) -- One of my major themes this fall for retail stocks is that it is highly unusual for consumer staples, consumer discretionary and retail-wholesale companies to be plays on technical momentum, but that was a story in 2012. I have been profiling a dozen retail bubble stocks, and after setting new all time highs or multi-year highs this year, these stocks have been deflating into year end.

On Wednesday, I wrote Consumer Staples Stocks Are Holiday Laggards with that sector 14.5% overvalued according to www.ValuEngine.com. Of the dozen retail bubble stocks I have been covering, two are additional consumer staples stocks included in today's post.

On Nov. 29 I wrote Retail Bubble Stocks Play On Earnings Momentum . This story was an update to my original post on Oct. 17, Analyzing the Retail Stock Bubble . One retail bubble stock is in the consumer discretionary sector which is 2.9% overvalued. Nine of the dozen are in the retail-wholesale sector which is 12.5% overvalued. Five of these are in the retail-discount and variety industry which is 10.9% overvalued.

Among the dozen bubble stocks, six are undervalued and six are overvalued. One has a strong buy rating, nine have buy ratings, and two have hold ratings. Only one has declined slightly over the last 12 months and eight had double-digit gains between 16.1% and 67.7% over the last 12 months. All are projected to be higher over the next 12 months by 2.9% to 14.0% thus lagging the performance of the past 12 months. Six have reasonable trailing 12 months price-to-earnings ratios, and six have elevated P/E.

Chart Courtesy of Thomson/Reuters

Nine of the 12 retail bubble stocks are components of the iShares Dow Jones US Consumer Services sector index fund ( IYC). IYC ($85.88) set an all-time high at $89.08 on Dec. 18, and closed Wednesday below its 50-day simple moving average at $86.11, which indicates risk to the 200-day SMA at $82.94. The weekly chart (not shown) shifts to neutral from positive on a close this week below the five-week modified moving average at $86.25. My annual value level is $78.65 with monthly and weekly pivots at $86.72 and $86 93 and quarterly risky level at $90.39.